This is an old version of TXT from 13 days ago (Oct 31, 2026).See the latest version
TXT
- Price
- $85.70
- Discount category
- Below intrinsic value
- Next earnings
- Jan 29, 2027
- Next earnings is estimate
- Yes
- Company name
- Textron
- Sector
- Aerospace and defense
- About
- Textron is a US aerospace, defense and industrial company based in Providence, Rhode Island. Textron Aviation makes Cessna and Beechcraft business jets, turboprops and piston aircraft and sells parts and services. Bell makes military and commercial helicopters and tiltrotor aircraft, including the H-1 helicopters and the MV-75 Cheyenne, the US Army's new long-range assault aircraft. Textron Systems makes armored land vehicles, uncrewed systems and training services. The Industrial segment includes Kautex, which makes fuel systems for cars, and Textron Specialized Vehicles, which makes E-Z-GO golf carts and other vehicles. A small Finance segment lends to aircraft buyers. Revenues were $3.83 billion in Q2 2026. In April 2026, Textron said that it intends to separate its Industrial segment.
- Thesis
- The market prices Textron for slow profit growth and for the risk on its large new military program. In Q3 2026, Bell revenues fell 9% because of lower MV-75 volume, and Textron Aviation's segment profit rose only 4% on 14% higher revenues because of manufacturing inefficiencies. The MV-75 Cheyenne is Bell's most important future program, and its funding depends on US budget decisions each year. In October 2026, Textron said that Congress approved the Army's Above Threshold Reprogramming request for the MV-75, so the extra 2026 funding that its outlook assumed is now in place. Investors also value Textron as a conglomerate with a low-margin Industrial segment. Results are ahead of plan: in Q3 2026, adjusted EPS rose to $1.76 from $1.55, and Textron raised its 2026 guidance to adjusted EPS of $6.55 to $6.65 and manufacturing cash flow before pension contributions of $800 million to $900 million. For the gap to close, three things must be true. The MV-75 must get its funding in later US budgets and move through development on schedule. Textron Aviation must turn its $8.0 billion backlog into more deliveries with better margins. Textron must complete the separation of the Industrial segment, by a sale or a spin-off, within 12 to 18 months of April 2026, as planned. The 2027 guidance in January 2027 is the next and main test. If these checks pass, the gap can close over the next four to six quarters. The main reason it may not close is a delay or a cut in MV-75 funding.
- Risks
- The MV-75 Cheyenne depends on US Army funding each year. Congress approved the extra 2026 funding in Q3 2026, but a delay or a cut in a later budget can lower Bell's revenue, earnings and cash flow. Bell revenues fell 9% in Q3 2026 because of lower MV-75 volume. Demand for business jets depends on the economy and on corporate profits. Lower orders, or more manufacturing inefficiencies, can lower Textron Aviation's deliveries and margins. The separation of the Industrial segment may take longer than planned, or bring a lower price than investors expect. Tariffs and supply chain problems can raise costs for aircraft and industrial products.
- Balance sheet
- Cash: $1.6B Debt: $3.5B Net debt: $1.9B Undrawn credit line: $1.0B, to October 2030 Debt due within 12 months: $355M At October 3, 2026, Textron's manufacturing group had cash and equivalents of $1.61 billion and debt of $3.47 billion, of which $355 million was due within 12 months. Net debt to capital was 19% and debt to capital was 30%, with shareholders' equity of $8.12 billion. Nothing was drawn on its $1.0 billion senior unsecured revolving credit facility, which expires in October 2030. The Finance group had cash of $86 million and debt of $339 million. Net cash from operating activities of the manufacturing group was $512 million in Q3 2026, and Textron bought back $239 million of shares in the quarter. Textron now expects manufacturing cash flow before pension contributions of $800 million to $900 million in 2026. As of Oct 3, 2026.
- Checkpoints
- Oct 29, 2026: Q3 2026 earnings: MV-75 funding and deliveries. Passed. Watch: Results on track for the $6.40 to $6.60 adjusted EPS guidance with the extra MV-75 funding received pass; a cut to the guidance or a funding delay fails. Outcome: The Army received Congressional approval for the extra MV-75 funding, and Textron raised its 2026 adjusted EPS guidance to $6.55 to $6.65. Jan 29, 2027 (estimate): 2026 results, the 2027 guidance and the Industrial separation. Pending. Watch: A 2027 outlook with higher earnings and a clear path to sell or spin off the Industrial segment passes; lower guidance or a stalled separation fails.
- Recent events
- Oct 29, 2026: Textron reported Q3 2026 results. Revenues rose 4% to $3.8 billion. GAAP EPS was $1.56 and adjusted EPS was $1.76, up from $1.55. Textron Aviation delivered 51 jets and 32 turboprops, and its revenues rose 14%. Bell revenues fell 9% to $933 million because of lower MV-75 volume. Textron said that the Army received Congressional approval for its Above Threshold Reprogramming request for the MV-75. Textron raised its 2026 guidance for adjusted EPS to $6.55 to $6.65, from $6.40 to $6.60, and for manufacturing cash flow before pension contributions to $800 million to $900 million. It bought back $239 million of shares. Sep 29, 2026: Textron said that it will report Q3 2026 results on October 29, 2026. Sep 28, 2026: Aviation Week reported that a Pentagon reprogramming notice of September 28, 2026, moved $200.2 million to the Army's MV-75 development account. This brought the program's fiscal 2026 funding to $1.422 billion. The notice said that the $230 million approved in July was not enough. Textron had used its own money to keep the program on schedule. Jul 28, 2026: Textron reported Q2 2026 results. Revenues rose 3% to $3.83 billion. GAAP EPS was $1.42 and adjusted EPS was $1.62, up from $1.55. Textron Aviation delivered 40 jets and 44 turboprops and had a backlog of $8.0 billion. Bell revenues rose 6% to $1.1 billion with higher H-1 and MV-75 volume, and Bell's backlog was $7.5 billion. Textron kept its 2026 guidance and bought back $209 million of shares. Apr 30, 2026: Textron said that it intends to separate its Industrial segment, Kautex and Textron Specialized Vehicles, from its aerospace and defense businesses. It will look at a sale or a tax-free spin-off and targets completion within 12 to 18 months. Apr 30, 2026: Textron reported Q1 2026 results. GAAP EPS was $1.25 and adjusted EPS was $1.45, up from $1.28. Textron bought back $168 million of shares.